Keystone zones expire for Chester properties

Tax exemptions on dozens of Chester properties expired Wednesday, enabling the city and county to collect property taxes from Harrah’s Philadelphia Casino and Racetrack for the first time.

Harrah’s is among about 100 city properties that received real estate tax exemptions through the state’s Keystone Opportunity Zones program, which offered tax incentives to spur development in distressed areas.

Now that those tax benefits have expired, the city, county and the Chester Upland School District will see the fruits of participating in the program, established in 1999.

For Chester, the expiration could not have come at a better time.

Advertisement

The city conservatively estimates it will receive about $2.8 million more in real estate tax revenue, Councilman Nafis Nichol said. That additional revenue is needed to cover increases to the city’s pension, health care, debt service and wage obligations.

The increased expenditures are the primary reason the city’s 2014 budget jumped to $53.06 million — an increase of $5.86 million from 2013.

“It’s critical,” Mayor John Linder said. “Even with the KOZs coming in, we’re still going to have challenges. We can’t afford not to have this KOZ money coming in.”

The county anticipates receiving about $1.2 million from expiring KOZ properties, county Assessment Manager John Vanzelst said. Most of that revenue will come from Harrah’s.

Delaware County Council Chairman Tom McGarrigle said the additional revenue was not earmarked for any particular aspect of the county’s $336 million budget.

“Every little bit we get helps,” McGarrigle said.

Both the city and the county are in the process of finalizing real estate assessments for each of the properties, including two of the city’s waterfront centerpieces — the Wharf at Rivertown and Harrah’s. All property owners may appeal their assessments.

The Delaware County Board of Assessment tentatively has assessed Harrah’s building at $218 million and its land at $6.88 million, Vanzelst said.

Nichols declined to release the city’s tentative assessment until it also was approved by Chester Upland. The city and school district are working jointly to assess the expiring KOZ properties.

Ron Baumann, Harrah’s general manager, said the casino is in discussions with representatives from the county, the city and Chester Upland regarding the property assessment.

“It was a 10-year program that had a start and an end date,” Baumann said of the KOZ expirations. “We were hoping that there would be some extension, but certainly knew there was an end date to it.”

Harrah’s already has a heavy tax burden. It shells out 55 percent of its slots revenue and 14 percent of its table games revenue to the state. The casino pays Chester and the county 4 percent of its gross slots as part of a land lease agreement and also contributes money from table games revenue.

“Since we’ve been here, we’ve paid over $1.3 billion to the state, the city (and) the county,” Baumann said. “You name the agency, we pay the tax.”

The casino employs about 1,700 people, all of whom must pay the city’s wage tax. Their collective wage taxes equate to about $750,000, Baumann said.

PPL Park also is located within an expiring KOZ, but a lease agreement requires Keystone Sports and Entertainment to make payments in lieu of property taxes through 2040.

In addition to real estate taxes, some KOZ properties also received exemptions from paying business privilege taxes.

Nichols lauded the KOZ program. The county, city and Chester Upland extended KOZ benefits to the city’s undeveloped zones last year in an attempt to push further development.

“The KOZs have benefitted the city by attracting new businesses here,” Nichols said. “We are happy that those businesses are here. The city is going to be very mindful and useful of the additional tax dollars that are coming in the near future.”

About the Author

John Kopp is a reporter for the Delaware County Daily Times, who covers state and county politics. Follow him on Twitter @DT_JohnKopp Reach the author at jkopp@delcotimes.com
or follow John on Twitter: @DT_JohnKopp.